Research
High debt tends to reduce consumption growth – Norges Bank memo
Research tries to capture diversity of household balance sheets, finding consumption tends to grow more slowly among those with high debt levels
BIS paper examines impact of fiscal rules in Latin America
Authors note countries with rules with "wider coverage" and "supporting procedures" can be more stable; more widely, rules help them behave 'less procyclically'
IMF paper questions ‘visceral opposition’ to inflow controls
Guilty by association: controls on capital inflows “inextricably” linked to those on outflows, paper says; controls not “worse” or “costlier” than other policy tools
Debt repayment problems have ‘severe consequences’ on consumption, paper finds
Quarterly consumption 30% lower when debt repayment problems arise, research suggests, while recovery after the arrears is smaller than the initial decline
Danish economists test measure of systemic risk
National Bank of Denmark paper uses ‘SRISK’ measure to assess systemic risk in the Danish financial sector, finding it was a good predictor of banks that needed bailing out
Research compares borrower-based macro-pru tools
Debt service-to-income caps generate ‘less pronounced macro feedback’ in the short term than loan-to-value limits, working paper finds
Bank recapitalisation is a ‘powerful’ policy instrument, paper suggests
Economy likely to remain in an ‘anaemic state’ until certain conditions met, research says; bank recapitalisation more effective than fiscal expansion in encouraging aggregate demand
Monetary policy does not ‘persistently impact’ bank lending, paper finds
Working paper published by Central Bank of Cyprus examines the impact of interest rate changes on both lending and credit risk
Research considers impact of fiscal consolidation on debt-to-GDP ratio
Working paper published by ECB finds fiscal consolidation conducted through a revenue increase, rather than a spending cut, is ‘self-defeating austerity’
Paper models complications to systemic financial shock responses
Different classes of illiquid asset and different types of banking network produce complicated responses to systemic financial shocks, Bank of Italy working paper argues
Research considers why macroeconomic announcements impact asset prices
A working paper published by the ECB weighs the ‘intrinsic value’ of macroeconomic news announcements in the US, finding timing is crucial to maintaining it
Illiquidity, concentrated bond holding raise volatility – paper
The volatility of financial market price shocks in the Bund and taper tantrums was aggravated by illiquidity and concentrated holdings of bonds, working paper finds
Weaker shareholder liability need not mean more risk-taking, Riksbank paper finds
Study of abolition of double liability in Canada finds bank riskiness did not increase; authors suggest weaker incentives for shareholders were offset by closer scrutiny by depositors
GDP lag overcome with nowcasting, Sarb paper says
Nowcasting will assist policy-makers understand path of real economic activity, authors say, finding model outperforms others significantly
NBIM reports clarify demands for high ethical standards
Norwegian SWF expects firms it invests in to address a broad range of long-term risks, including the need to meet high ethical standards; publishes expectations document on human rights
Market discipline ‘key pillar’ of RBNZ toolkit, article says
Article in latest Reserve Bank of New Zealand bulletin insists new requirements have not come at the expense of market discipline – they are both ‘key pillars’ of regulatory toolkit
Low income households ‘highly’ vulnerable to changes in interest rates, paper shows
Banks and regulators require the use of ‘richer’ information to understand consumer debt, a Central Bank of Chile paper finds; new model would help evaluate economic policies
BIS paper finds forecasters put too much faith in private information
‘Noisy information model’ of inflation forecasting implies forecasters put inefficient weightings on private information to differentiate themselves
Distribution of liquidity can impact monetary policy transmission, paper finds
Research published by Norges Bank encourages central banks to pay attention to the distribution of liquidity in the interbank market, as well as its overall level
Negative commodity price shocks weaken EM financial sectors, IMF paper argues
The financial sectors of resource-rich emerging economies are vulnerable to negative commodity price shocks, working paper argues; better policy can increase resilience
BoE paper suggests action when markets unsure about macro-prudential policy
BoE economists say policy-makers should be more active in times of uncertainty in the private sector, suggesting it need not make them "more cautious"
Responses to commodity shocks only have ‘small’ impact on investment, paper finds
Flexible inflation-targeting frameworks and exchange rates are ‘essential’ to limit the macroeconomic impact of commodity price volatility
Bank of Italy growth indicator ticks up
Italian central bank’s ‘timely’ index shows eurozone GDP growth continuing in December, with the indicator reaching triple its level of a year ago
Floating exchange rate has led to more volatility, Norwegian paper says
Moving to inflation targeting regime prompted rise in volatility in nominal exchange rates, research says; no depreciation or appreciation trends evident, however